A large multi-million dollar commercial manufacturer with 800+ employees applies the principles of Lean to address payroll process problems.
Weekly payroll errors created angry and frustrated hourly employees.The actual cost of reissuing a “correct” paycheck was $150 per check or $7200 per week.
A review of weekly payroll errors indicated that, on average, 48 hourly employee paychecks were issued in the wrong amount. A team was formed to figure out where in the process mistakes were being made.
The sources of errors involved improper time clock usage, inadequate supervisor review, failure to provide advance approval of overtime,and payroll programming errors that contributed in incorrect calculations. Training was provided to all employees providing instruction in use of the time clocks and new signage at the time clocks were added for further clarification. Supervisors were also given additional instruction in how to review the on-line time-sheets to insure correct clocking was completed.
The number of payroll errors was reduced from 48 per week to less than 7 within a 2-month timeframe. The actions taken resulted in a cost savings of $6150 per week. The annual savings? $319,000.
And yes, if you had any doubts, this was a true story.
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